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College students: How to use your credit card responsibly

Aug. 31, 2022
9 min read
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Editor’s note: This post has been updated with new information.


As a recent college graduate, I can personally vouch that I was never taught how to manage my finances in my four years of higher education. For lack of a better word, you’re expected to “adult” as soon as you enter the workforce, which makes it imperative to take your financial education into your own hands before you head out into the big, wide world.

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Over the past year, I’ve learned some crucial financial lessons — admittedly, the hard way for some of them. But if you’re still in college, it can actually be the perfect time to get a jump start on building credit.

From move-in to move-out day, you’ll have plenty of expenses throughout your time in school where a credit card can come in handy. Opening and managing your first credit card can be stressful and potentially perilous as you’re granted this newfound purchasing power. However, by learning how to use a credit card responsibly for both one-off and day-to-day purchases, you can build excellent financial habits that will help you for the rest of your life.

Related: TPG’s beginner’s guide to credit cards: Everything you need to know

Besides establishing credit, your first credit card can help you earn valuable rewards, from cash back to points and miles for future travel. And by the time you graduate from college, you’ll have several years of credit under your belt — necessary for securing apartment leases, car loans and mortgages.

While some of these rules for responsible credit use may seem more obvious than others, we’ll go over all of the dos and don’ts that will help you build a solid financial future.

Get familiar with the credit card world

There are so many credit cards to choose from that picking your first can feel overwhelming. Do some research. It’s important that you select the best card for you and your lifestyle. Just because a friend raves about a card doesn’t mean it’s the right one for you.

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TPG is dedicated to helping you make informed decisions, so start with our credit cards beginner's guide and check out our wide-ranging credit card reviews. Once you get a rewards credit card, we’ll teach you all of the amazing things you can do with the points and miles you're earning.

Starting out, you likely won’t qualify for any premium credit cards. For most college students, you may have limited income from a part-time job (or possibly no income at all). But there are plenty of cards made exclusively for college students, many with no annual fee, and these will help you start building credit. From restaurants to groceries and gas, a student credit card will reward you for these everyday purchases.

Related: Best credit cards for college students

I didn’t know any better, so I opened my first credit card out of pure convenience. Because I already owned a checking and savings account with Wells Fargo, I opened the Wells Fargo Cash Back College Card on my 18th birthday, which offered a lackluster 1% cash-back rate on all my purchases. While this card helped me build credit and opened doors for bigger and better cards down the road, there are other student cards on the market that offer better rewards rates.

The information for the Wells Fargo Cash Back College card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

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For students shopping around for their first card, I recommend the Journey Student Rewards from Capital One. It comes with no annual fee and encourages cardholders to build excellent credit habits from the get-go. You’ll earn 1% cash back on everything, but that earning rate gets bumped up to 1.25% if you pay your balance on time (which you should be doing anyway). Plus, it’s a no-annual-fee card.

Related: Review of the Journey Student Credit Card from Capital One

Manage your own finances

While getting the right card is imperative for establishing your credit, it’s equally important to take control of your finances.

You might already have a checking and a savings account, but if your parents have been the ones managing them thus far, it’s time to ask for your own access. Keeping track of your money and your transactions is key to becoming financially responsible and independent.

PHOTOALTO/LAURENCE MOUTON/GETTY IMAGES

The same principle goes for credit cards. If you and your parents decide to start building your credit by adding you as an authorized user on their accounts, ask for account access. Some parents may not feel comfortable giving their child a view into the family finances, but they may want to reconsider. By allowing the authorized user to see where they stand against the card’s credit limit and what they’re earning on their spending, they will be motivated to be smarter with their purchases.

Related: Credit cards with the greatest value for authorized users

If you, the student, decide to open a credit card of your own, keep track of your spending and stay on top of your bills, as both play a role in calculating your credit score. Set aside a few minutes to check your account a couple of times every week. This will help you avoid missed payments and unnecessary charges from interest fees.

Related: The best way to pay your credit card bills

Set your own financial goals

Having a specific goal in mind will help keep you on track — and there’s nothing like the satisfaction of successfully reaching a milestone.

Perhaps your initial goal is to learn the basics of credit and build good credit card habits. In this case, you may not even need to worry about earning rewards if your intention is to simply ease into the credit card world.

But if your goal is to collect enough points to pay for your spring break trip, find out what you’ll need to spend to earn these rewards. You could earn enough points and miles just from your sign-up bonus, which will have a spending threshold you’ll have to meet in the first few months of card membership.

Related: Credit card sign-up bonuses you can earn with $1,000 or less in spending

How to use credit cards responsibly

When you get your first credit card, you have access to more spending power. But this isn’t “free money, though,” as highlighted by Elly Szymanski, assistant vice president of credit card products at Navy Federal Credit Union. "Ensure whatever you put onto your card is within your normal budget. It’s critical that you track your spending and pay your balance in full every month to avoid debt from late fees and interest charges. If doable, I recommend setting up automatic payments, along with text alerts on your mobile device, to guarantee on-time payments."

If you’re new to the travel rewards world, get familiar with the 10 commandments for travel rewards cards. Specifically, commandment number one: thou shalt pay thy balance in full.

KRISANAPONG DETRAPHIPHAT/GETTY IMAGES

If you don’t and you end up with an unpaid balance, interest will be tacked on and you'll wind up paying even more for your purchases in the long run. Most travel credit cards carry high interest rates — although a few offer 0% APR for an introductory period — so running up a balance will negate the value of any points or miles you earn. Finally, this bad behavior will take a toll on your credit score, hurting your ability to open cards or obtain a mortgage or other loan in the future.

If you are wary about this new-found spending power and the risks associated with credit cards, a "secured credit card is a great option," according to Szymanski. "Students may want to consider starting with a secured card as it can help you learn the basics of credit cards and valuable money management skills when you’re young. Some secured cards come with benefits too." These rewards can typically be redeemed for gift cards, merchandise or cash back.

For students with a traditional (unsecured) credit card, managing your money wisely is important. Szymanski says maximizing the card's benefits comes next in importance. "Especially now as back-to-school costs are so high, opt to shop through your card issuer’s online shopping portal, if available. This gives you the ability earn bonus points or cash back beyond what you’d get for purchasing in-store or from a retailer’s website."

Related: Your guide to maximizing shopping portals for your online purchases

Another important factor with credit cards is how much of your spending power you're using — known as the utilization rate. "If you have a $5,000 limit on your credit card, you don't want to come close to reaching it, as a high utilization negatively impacts your credit score," Szymanski says. "Maintaining a healthy track record can boost your score."

Related: How your credit scores work

Bottom line

Getting a credit card in college can be highly rewarding, as debit cards won’t offer you any points and miles. From building your credit to earning points redeemable for travel, the options are practically endless.

However, all of this will depend on being a responsible first-time credit user. The earlier you can adopt responsible credit and spending habits, the easier accessing cheaper travel, as well as auto and home loans, will be.

Related: How to check your credit score for absolutely free

Additional reporting by Ryan Smith.

Featured image by TOPALOV/GETTY IMAGES
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG featured card

Best premium travel card for value
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

1 - 10X points
10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
5xEarn 5x total points on flights through Chase Ultimate Rewards®.
3xEarn 3x points on other travel and dining.
1xEarn 1 point per $1 spent on all other purchases

Intro offer

80,000 bonus points
Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

Annual Fee

$550

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more
Best premium travel card for value
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
5xEarn 5x total points on flights through Chase Ultimate Rewards®.
3xEarn 3x points on other travel and dining.
1xEarn 1 point per $1 spent on all other purchases
  • Intro Offer
    Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

    80,000 bonus points
  • Annual Fee

    $550
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more